* World stocks start quarter higher
* Tokyo trading halted by system glitch
* Uncertainties over U.S. election cloud outlook (Adds close of European markets)
NEW YORK, Oct 1 (Reuters) – Renewed U.S. stimulus hopes lifted gold prices and global equity markets on Thursday, even as an all-day outage on Tokyo’s Nikkei and a Brexit legal row sparked a bumpy start to what portends to be an explosive fourth quarter.
The dollar slipped against major currencies as hopes for a new round of fiscal stimulus from Washington cheered investors and spurred them to seek higher-yielding but riskier currencies.
Stocks on Wall Street and in Europe rose as investors bet on more stimulus after data showing the number of Americans filing new claims for jobless benefits fell last week but remained at recession levels, while personal income dropped in August.
The economy is recovering well but large U.S. corporations have announced layoffs, so there’s a need for stimulus to support income and people’s lives, said Etsy Dwek, head of global market strategy, Natixis Investment Managers, in Geneva.
Walt Disney Co, Goldman Sachs Group Inc and the airline industry, among others announced job cuts this week.
“The more you can support or give job confidence, the better it will be,” Dwek said. “If we don’t get stimulus, it’s going to be extra bumpy.”
The number of Americans filing for jobless benefits fell to 837,000 in the week ended Sept. 26, but claims could rise again over the next few weeks as businesses cut more jobs to ride out the recession.
MSCI’s benchmark for global equity markets rose 0.39% to 567.33, while the broad FTSEurofirst 300 index in Europe closed up 0.23% at 1,402.27.
On Wall Street, the Dow Jones Industrial Average rose 0.21%, the S&P 500 gained 0.36% and the Nasdaq Composite added 0.81%.
The euro and European shares advanced on data showing the region’s recovery from the coronavirus-induced slump helped traders claw back some of September’s heavy falls.
The euro gained 0.19% to $1.174 and the Japanese yen weakened 0.14% at 105.57 per dollar.
Sterling was on a wild ride. News that the European Union had launched a legal case against Britain for undercutting their earlier divorce deal sent the pound tumbling, only to then pinball higher on a Financial Times tweet that the two sides had made some progress in trade talks.
With U.S. elections, as well as the potential for a COVID-19 vaccine and a no-deal Brexit all lying ahead, markets are likely seeing the lull before a storm, according to Chris Dyer, Eaton Vance’s director of global equity.
“What I have been saying is that the equity markets are likely to move violently sideways in the next few months,” he said, though in 12 months, the trajectory should be a brighter one of global recovery.
Asian trading saw a 0.4% rise on MSCI’s regional index , led by 1.1% and 1.5% gains in Australia and India. The day was dominated by a rare glitch at Tokyo Stock Exchange, the world’s third-largest stock market.
TSE President Koichiro Miyahara said the exchange decided to suspend the full session because an early resumption could cause market confusion, but it planned to restart on Friday.
The meltdown also coincided with the release of the Bank of Japan’s closely watched tankan corporate survey, which showed business sentiment improved from a decade low.
S&P 500 futures rose 0.8%, extending Wall Street’s rebound, amid strong employment data and talk of progress on long-delayed COVID-19 relief legislation from U.S. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi.
With a $20 billion lifeline for the battered airline industry part of a potential $1.5 trillion package, American Airlines, Delta, United Airlines and JetBlue shares climbed 1.3%-3.6% in premarket trading.
COVID-19 vaccine developments underpinned market sentiment too, despite rising infection rates in both Europe and the United States and a global death toll now above 1 million.
In the currency markets, the dollar’s slip after its best month since July 2019 lifted Australia’s trade-sensitive dollar 0.5% to $0.72 and Mexico’s peso more than 1%.
Gold gained 1% after its worst month since November 2016 while oil prices slid, adding to a 10% September drop.
Brent crude futures fell $1.83 to $40.47 a barrel. U.S. crude futures slid $1.97 to $38.25 a barrel.
Spot gold prices rose 1.22% to $1,908.53 an ounce.
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